The decision had been made after two private takeover offers did not offer the taxpayer "sufficient value for money."
This means that the government are now in control of Northern Rock, and is another chapter to the ongoing saga that is Northern Rock.
The government have appointed Ron Sandler, who has promised saver's that their deposits are secure.
Mr Sandler had previously restored confidence in Lloyd's bank, after its years in financial disarray.
The Chancellor of the Exchequer, Mr Darling explained the governement's decision, saying it was better for the government to hold onto Northern Rock until market conditions improve and its value increases.
Shadow Chancellor George Osbourne opposes the idea and said:
"The nationalisation plans were 'catastrophic', and that they would be opposed by the Conservatives."
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